Question

Vernon Books buys books and magazines directly from publishers and distributes them to grocery stores. The wholesaler expects to purchase the following inventory. April $120,000 May $140,000 June $152,000 Required purchases on account) Vernon Books's accountant prepared the following schedule of cash payments for inventory purchases. Vernon Books's suppliers require that 95 percent of purchases on account be paid in the month of purchase: the remaining 5 percent are paid in the month following the month of purchase. Required a. Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. b. Determine the amount of accounts payable the company will report on its pro forma balance sheet at the end of the second quarter. Complete this question by entering your answers in the tabs below. Required A Required B Complete the schedule of cash payments for inventory purchases by filling in the missing amounts. June Schedule of Cash Payments for Inventory Purchases April May Payment for current accounts payable 5 114,000 Payment for previous accounts payable 8,000 Total budgeted payments for inventory $ 122.000

Answer 1

Required A :
Schedule of cash payments for inventory purchases
	April	May	June
Payment for current accounts payable ( 95% of current month's purchases )	114000	133000	144400
Payment for previous accounts payable ( 5% of previous month's purchases )	8000	6000	7000
Total budgeted payments for inventory	122000	139000	151400

Required B :
Accounts payable at the end of second quarter = June's purchases on account * 5% = 152000 * 5%	7600